Interest: Interest Review Unit (IRU): General principles: Delay in applying for and pursuing an interest charge
Where a charge to interest is overlooked and then made later, or payment asked for after aperiod of time, a customer’s dissatisfaction is understandable. However the delay inasking for payment of the interest has no affect on why the charge was made in the firstplace. The interest charge has come about through circumstances happening in the periodbetween the relevant date and the payment of the tax and is lawfully due regardless ofwhat has happened since.
The delay in asking for payment does not increase the amount of interest payable becauseHMRC do not charge interest on interest. Despite any delay, the customer is not normallyput at a monetary disadvantage by being asked to pay at a later date. The customer is notasked to pay more at the later date than was due at the earlier date. So the interestcharge should be upheld.
One reason for challenging an interest charge may be that the ‘statute of limitations’applies and more than six years delay has occurred and HMRC cannot now charge theinterest. This statute does not apply to tax and interest, so this challenge should not beaccepted.